Although the housing market is showing some signs of recovery, millions of Americans still struggle with their monthly mortgage payments. Texas is a non-judicial foreclosure state, so in most cases, the lender does not need a court order to foreclose on a residential mortgage. As a result, most Texas foreclosures are processed in under a month, leaving limited time for foreclosure defense.

Most South Texas families have very little savings, so if they fall even one or two months behind on their mortgage, it can be very difficult to catch up. Although most lenders participate in government-sponsored loan modification programs, such assistance may not come in time to save your house, and may not even come at all.

What Bankruptcy Can Do

If you received a foreclosure notice, chapter 7 or chapter 13 bankruptcy offers both short- and long-term solutions to your debt problems.

Automatic Stay: The instant you file, Section 362 generally goes into effect. Lenders cannot take any adverse action against you without special permission from the bankruptcy court. Even if your property is scheduled to be auctioned off, a bankruptcy filing can save your home. You do not have to prove anything in court, such as fraud or unfair lending practices. All you have to do is file.

Protected Repayment Period: In a chapter 13, you have either three or five years to catch up on your mortgage payments. The lender must accept your terms, as long as the trustee approves your repayment plan. In nearly all cases, the automatic stay remains in effect through the entire repayment period.

Lien Stripping: You may be able to remove a second mortgage. For example, a number of people financed a residence with an 80/20 mortgage. If your home’s value has dropped below a certain threshold, the bankruptcy court may classify a second mortgage as “unsecured” and discharge it.

Cram Down: In some instances, you may be able to reduce the amount of debt to the fair market value of the asset. So, if you owe $200,000 on a home that is only worth $150,000, the judge may discharge a portion of the debt.

If the bank still tries to take your home, the judge may refer the matter to mediation, where you will have the opportunity to obtain a loan modification.

Bankruptcy can help you stay in your family home. If you are struggling with unpaid debt, reach out to an experienced San Antonio bankruptcy lawyer today. Call The Law Offices of Chance M. McGhee at 210-342-8400.